This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Dangdang Surges as 'China's Amazon' Hits Crossroads

NEW YORK ( TheStreet) -- E Commerce China Dangdang (DANG - Get Report) was climbing Thursday on more than three times its average volume after an upbeat outlook triggered a short-squeeze, prompting investors who had bet the stock would fall to buy shares to curtail their losses.

Dangdang was surging more than 5.5% to $5.22, extending a two-week gain to 41%. Shares have been soaring since May 2, when the company announced that it was launching a "Flash Sales Channel" on May 7, featuring 'deal-of-the-day' items to encourage impulse purchases.

"They've had a vertical move over the past two weeks and are sitting right near potential resistance from their 200-day moving average right here," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati. "If the shares can break this trend line, the shorts betting against the shares could be forced to cover and push the shares that much higher."

After a better-than-expected first quarter that showed growth in its marketplace unit, the company known as the "Amazon" of China said revenue for the second quarter will increase 23% to about RMB1.6 billion, or about $260 million. Dangdang also expects its marketplace unit to grow 175% this quarter compared to the same period a year ago. Dangdang's been trying to improve its margins by shifting its focus to the marketplace unit, which allows third-party merchants to sell their general merchandise products alongside products sourced by the company.

"We are confident that Dangdang's transition from online bookstore to an integrated online shopping mall is well under way," Peggy Yu Yu, Dangdang's executive chairwoman said in a statement.

This morning, Dangdang reported a first-quarter loss of 15 cents (RMB0.91) per ADS on a revenue increase of 23% to $214.75 million (RMB1.3338 billion). Wall Street on average was expecting an 18 cents loss on revenue of $214.69 million.

General merchandise revenue for the first quarter increased 12% from a year ago to $66.3 million (RMB411.7 million). Other revenues, including revenues from third-party merchants jumped 194% to $9.4 million (RMB58.1 million). Book and media sales grew 24%, allowing the company to maintain a dominant market share in online media sector. The company's gross margin rose to 17.2%, the highest since the second quarter of 2011, compared with 14.2% in the first quarter of 2012 and 13.4% in the fourth quarter of 2012.

Written by Andrea Tse in New York

>To contact the writer of this article, click here: Andrea Tse.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DANG $6.10 0.00%
AAPL $107.72 0.00%
FB $87.23 0.00%
GOOG $597.79 0.00%
TSLA $238.63 0.00%

Markets

Chart of I:DJI
DOW 16,058.35 -469.68 -2.84%
S&P 500 1,913.85 -58.33 -2.96%
NASDAQ 4,636.1050 -140.4030 -2.94%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs